Josh Hawley's Implicit Futurism

The Missouri Senator doesn't want to halt American innovation. He wants to save it.

For a few years now, Josh Hawley has been working to set himself up as the scourge of the tech giants. As Missouri’s Attorney General, he initiated an antitrust investigation against Google. As a senator, he’s led the charge against Big Tech on multiple fronts.

Far from a Luddite, though, Hawley has articulated an agenda that’s geared toward restoring America’s capacity for innovation, particularly in the physical world.

The Attention Arbitrage Economy

“What passes for innovation by Big Tech today isn’t fundamentally new products or new services, but ever more sophisticated exploitation of people. “

In 2019, shortly after being elected to the Senate, Hawley gave a talk at the Hoover Institution titled Big Tech and the Future of the Free & Open Internet. After describing a number of policy issues of relevance to the tech industry, he arrived at the purpose of his talk:

“All of those questions are downstream of a larger one… and that is the question of the worth of the social media platforms, and the social media business model to begin with.”

He then frames the business model of the social media companies as a form of “attention arbitrage.” Rather than creating value, the purpose of the platforms is to capture as much attention from consumers as possible, in order to sell it to advertisers. This isn’t fundamentally different from the business models of television, radio, and print media. The difference is one of degree, but the degree of difference is large.

The social media platforms benefit from user data more vast and granular than anything past forms of media ever had access to. This data informs the design of the platforms themselves, the goal being to maximize the amount of time users are spending on these platforms.

Beyond the drain on users’ attention and the potential psychological risks that the social media platforms pose, Hawley makes an often overlooked point about opportunity costs:

“This is what some of our brightest minds have been doing with their time for years now… What else might they have been doing?”

It’s strange to think that our economy could have misallocated talent to such disastrous effect, but that does seem to be the case.

The Great Disconnect

Within the American domestic economy, there’s a growing disconnect between value-creation and price. To use an example from Peter Thiel’s Zero to One, Google is an incredibly valuable company, but it’s hard to argue that it generates more value than all of America’s airlines combined. Rather, its monopoly status in the search market has positioned it to capture more of the value it produces than firms in more competitive spaces can. The lesson here is that a firm’s ability to create value matters less than how the market is structured. Aspiring entrepreneurs should take note of this lesson, but so should policymakers.

Compared with mid-20th-century America, economic growth today is based largely on innovation in finance and digital advertising. Meanwhile, costs associated with housing, healthcare, and higher education have become increasingly unmanageable. The trend is clear: the American economy is increasingly geared towards activities that are digital, zero-sum, and disconnected from the needs of most Americans. 

Why?

Eric Weinstein has an interesting thesis. In an essay titled Anthropic Capitalism and the New Gimmick Economy, he argues that 20th-century American prosperity was more a product of historical contingencies than of anything inherent to market systems. While Weinstein has his own ideas about how these contingencies have broken down, his broader thesis does a good job of describing the ways in the market system, left to its own devices, can no longer be counted on to advance the cause of national greatness.

As we’ve discussed elsewhere, technological progress in the 21st century has centered almost exclusively on the computerized “world of bits,” rather than the physical “world of atoms.” It’s easier to start a website than it is to start a pharmaceutical company. If you’re a recent STEM graduate, it’s often more lucrative to go into finance than it is to go into a hard engineering field.

Part of this is due to the disparate tax and regulatory conditions to which the worlds of atoms and bits are subject. Part of it is due to America’s failure to protect its domestic manufacturing activity. Part of it is due to the growing financialization of the American economy. Perhaps some of it is because innovation in the world of atoms came earlier, and as a result, the industries it spawned have become too consolidated to admit new entrants, and most of the low-hanging fruit are gone anyway.

These forces are interconnected, and it’s hard to say which is the primary driver of the shift from production to arbitrage, and from atoms to bits.

Returning to Productive Innovation

“Men landed on the moon 50 years ago, a tremendous feat of American creativity, courage and, not least, technology. The tech discoveries made in the space race powered innovation for decades. But I wonder, 50 years on, what the tech industry is giving America today.”

The same year he delivered his speech at the Hoover Institution, Hawley appeared on an episode of The Realignment. When asked about the future of the tech industry, Hawley said explicitly what some of his previous statements had only hinted at:

“We need a more vibrant tech sector… We need our tech sector to provide innovations that are focused on worker productivity, that provide jobs for our broad middle class, and push forward the frontier of our knowledge in physics, in biomedicals, and not just in the world of bits and bites.”

In the same interview, Hawley mentions two specific prescriptions:

• Reshoring manufacturing activity, both through standard trade mechanisms, and also indirectly through means such as expanding the Export Control Act.

• Targeting federal research dollars to fields that are likely to have an outsized impact on our productive capabilities, such as advanced manufacturing.

In Hawley’s thinking, shifting our focus back to physical production will not only create jobs but actually enhance our ability to innovate in the physical world. He makes the obvious but somehow little-noted point that engineers generally don’t innovate in areas that they aren’t exposed to. Consequently, it’s impossible to be a nation that innovates in the world of atoms without maintaining economic activity in the world of atoms.

The hand of the state may be clumsy, but it is strong, and it will likely be necessary to use it if we want to restore the U.S. economy’s capacity for meaningful innovation.